PLAN YOUR FINANCE

PLAN YOUR FINANCE

BASICS OF PERSONAL FINANCE MANAGEMENT

Management of Personal Finance is basically to manage Expenses within the Income earned and to generate a surplus to take care of future needs .Ultimate aim is to have a good night's sleep tonight without financial worries for tomorrow clogging our mind and to have a pleasant dream of tomorrow . Expenses may be mandatory , essential or simply for luxury . Tax to be paid on Income is mandatory . Food , housing , clothing , transport or insurance may be essential . Buying a car or going on an overseas vacation may be treated as Luxury . Any how no clear cut division can be drawn as the expenses depend up on an individual's personal needs and any two persons' needs are not same . You are the best judge to decide what is essential and what is luxury .

Some facts about Expenses 1. Generally expenses go up as Income level raises . If you are earning Rs 50,000/- pm today , remember the days when you were earning Rs 5,000 pm . May be to 10 to 15 years earlier . You would be spending most of your earnings then as is the case for today also . Your incomes have always been drained by your expenses . One may blame inflation as the cause of such increase in spending . But inflation is not the only cause . Your life style has changed . You no longer take the bus for your daily transportation to work . You no longer eat in the same restaurant once you were having your lunch / dinner . Your child goes now to a "GOOD " School . New mode of transportation , new posh restaurants , new prestigious schools are taking away whatever extra you have earned . Thus expenses continue to fill your income buckets . 2. Level of expenses on essentials vary from person to person . An ordinary man may spend for bus fare for his daily transport while a blue collared worker may need a motor cycle or car for the same purpose . Eating at a restaurant may be a need for one family while others may feel it as luxury . Hence what we spend on "essential' is also out of our choice and hence can be controlled 3. More and more items move from luxury to essential as Income level raises . For example , buying a car or a TV or going for an overseas vacation which would have been treated as luxury earlier may become essential as one's income improves . In nut shell, Expenses whether for essential or luxury goods , are mostly out of of our choice and hence can be managed

Cake of the Future

HAVE CAKE AND EAT IT TOO Plan your Expenses and Credit Card use Tweak your Bank Accounts earn and Earn Extra Income

PLAN YOUR EXPENSESART OF MANAGING EXPENSES

Management of personal finance is the art of managing expenses . While we talk of controlling expenses , we do not mean cutting of expenses on what you love most or changing your life style . Your goal of earning more itself would have been to change your life style for better . However if your income level has dwindled due to any reason and you have been trapped in to debts , then only we suggest to change your life style to adapt to the new circumstances . In fact the whole exercise of personal finance management is to give stamina to continue existing life style even in such eventuality of reduced income . In case, if you manage personal finance today well , your future would be taken care of by your savings , investment and insurance . Hence by managing individual components of expenses like Tax , Insurance , Utilities and Luxuries , we can achieve the goal of controlling expenses for today and garner a surplus for future use . While making a plan for future what we call , Financial planning , to achieve our long term goals , the present surplus we generate will help us in guiding our future . We discuss separately on our FINANCIAL PLANNING PAGE about making future goals and achieving them .

Events like loss of job , accident , hospitalization , disease , theft etc or loss of life of earning member may be unforeseen , but not uncommon . We may not know when any of such things would happen , but we should be prepared for any eventuality. While loss of job , loss in business or loss of life may erode our income , accident or disease may bring us unexpected huge expenses . Insuring our selves and our family against such risks should become part of our regular expenses and should be treated as essentials . While insurance is available for many risks we may encounter ,we have to separately provide for Risk of loss of job or business loss.While taking insurance , care to be taken that all possible risks are covered through various policies adequately against maximum loss envisaged . Life insurance normally will have savings component and many use them as investment options . As they carry a substantial maintenance charges , they are not suitable purely for investment purpose . There are various insurance companies offering their services . Before taking any insurance , one should compare terms and conditions, premia charged and suitability for of the policy and standing of the insurance company . There are portals offering comparison services which can be use

Ten Tips for expenses control of utilities / Luxury items

1. Spend without guilt on what you consider essential for you . Cut down on what you think is not needed by you . 2. Buy what is affordable to you . You should not lose a night's sleep for paying its bill . 3. Buy because you need , not because your neighbor / colleague is owning it . 4. Remember Best is not always highest priced . 5. Change any item like cars , electronics or computer you are owning if the same is not working . Don't change because a newer model or version has come. Every quarter new versions would appear and we cannot always be owning the latest . As long as what we own suffices our requirement , don't change . 6. Plan your spending well in advance . Before spending , spend some time to compare prices of various vendors . Now with on line shopping , you can compare price , charges , services and decide where to buy . Some times local shops may sell cheaper than any big name . 7. You may get the same goods you want to buy at a discount on festive occasions or season ends . Wait if you can and reduce your expenses on the item . Planning will help . 8. Do not cut expenses on insurance , maintenance of goods you own . Such expenses are essential and would save you in long term . 9 . Be within your budget . Plan to spend only a portion of what is affordable by you . 10. As your income increases , your life style changes . Try to be conservative so that all your additional expenses do not eat away your additional Income . Save more and more of your additional income .

Cash : Cash is the first financial asset any one holds . Though its importance has come down over a period with advent of bank accounts , Credit and Debit Cards , Mobile money etc , cash is still primary tool for financial transaction in India . As one has to handle it on daily basis , one must be aware of the features of currency and ways to keep it safe . Reserve Bank of India , which issues the currency notes in India , has given valuable information about the security features of its various notes . Click here to visit

Bank accounts Bank accounts are the fundamental tools for managing personal finance .They help you to receive your income and make payment . Statement of account / pass book will help you to have tab on your on income and expenditure . By studying your account statement , you can know how you are spending your income and how much you are able to save .

Credit cards are useful as payment instrument which also carry few days of credit . They also act as your emergency stop gap arrangement before you make actual arrangement of needed finance . The credit card statements are again tools to understand the pattern of your spending

Housing Loans

Owning a house as against renting has its advantages .It shields you against inflation . Housing loans not only help you in buying a shelter of your own , but also reduce Tax burden . As such , it should be an important tool in managing your finance .

ONE IMPORTANT MANTRA FOR FINANCIAL PRUDENCE IS COMPARE . Whatever the service you avail , what ever goods you purchase , Spend some time to understand the products and compare cost and reward of the item . Once you have chosen the product , again spend some time in comparing Prices & Charges . In today's era of internet , utilise your computer and internet connection to your advantage , surf various sites offering such products and services . You can save a lot and Time spent will not go waste .

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